Slide 1: 2023 Half-Year Results
2023 HALF-YEAR RESULTS July 27, 2023
Slide 2: Preliminary remarks
Preliminary remarks THE 2023 FIRST-HALF consolidated financial statements were approved by the Board of Directors on July 26, 2023 A LIMITED SCOPE REVIEW of these financial statements has been performed by the statutory auditors 2023 HALF – YEAR RESULTS 2
Slide 3: Mercialys is in line with its 2023 targets and will be able to capitalize on its strong balance sheet structure
Mercialys is in line with its 2023 targets and will be able to capitalize on its strong balance sheet structure RESILIENT FUNDAMENTALS SELECTIVE INVESTMENT STRATEGY, OPPORTUNISTIC APPROACH FOR DISPOSALS Based on its H1 results, Mercialys confirms its 2023 objectives despite a Mercialys’ sound balanc
Slide 4: Contents
Contents 01 02 03 RESILIENT PERFORMANCE IN OUTLOOK & CONFIRMATION APPENDICES a challenging economic of 2023 targets environment Page 5 Page 24 Page 33 2023 HALF – YEAR RESULTS 4
Slide 5: Resilient performance in a challenging economic environment
01 RESILIENT PERFORMANCE IN a challenging economic environment
Slide 6: Inflation still at the heart of the macro-economic situation, weighing on consumer sentiment
Inflation still at the heart of the macro-economic situation, weighing on consumer sentiment CONSUMER PRICE (IPC) AND EVALUATION OF PAST AND FUTURE FRENCH COMMERCIAL RENT INDEX (ILC) FINANCIAL SITUATION, SPLIT BY COUNTRY (12M rolling Q average for IPC / Q/Q growth in % for ILC) (share of respondents
Slide 7: A stable household consumption in 2023 and a positive outlook supported by a still high savings rate
A stable household consumption in 2023 and a positive outlook supported by a still high savings rate CHANGE IN FINAL HOUSEHOLD FRENCH HOUSEHOLD SAVINGS RATE CONSUMPTION EXPENDITURE STILL ABOVE LONG-TERM AVERAGE (% yoy change) 30.0% 6.0% 21.0% 25.0% 4.0% 20.0% 2.0% 13.6% 15.0% 16.3% 0.0% 10.0% -2.0%
Slide 8: Good performance by Mercialys shopping centers, decorrelated from Géant hypermarkets
Good performance by Mercialys shopping centers, decorrelated from a lower level of attraction for Géant hypermarkets CUMULATIVE 6-MONTH CHANGE FREQUENT VISITS DEMONSTRATE THE DAY-TO-DAY IN FOOTFALL AT END-JUNE 2023 (1) ORIENTED RETAIL MIX (% change vs. H1 2022) (frequency of visit by Mercialys’ cust
Slide 9: Sustained level of retailer sales despite a distortion in footfall
Sustained level of retailer sales despite a distortion in footfall CUMULATIVE CHANGE ON WHICH PRODUCT CATEGORIES ARE YOU IN RETAILER SALES (1) PREPARED TO SPEND LESS BECAUSE OF INFLATION ? (% change vs. H1 2022) (% of customers respondents by segment category (2) Electronics Mercialys 3.4% 5 months
Slide 10: Affordability and costs charged to tenants
In this context, affordability, at the heart of Mercialys’ business model, is instrumental to its retailers’ health… OCCUPANCY AVERAGE OCCUPANCY COST RATIO (1) COST RATIO BY SEGMENT Costs charged to tenants 15% OCR Personal Items 11.1% 10.9% 16.1% 10.7% 10% OCR Culture & sport 8.3% Health & Beauty 9
Slide 11: …and to its end consumers purchasing power
…and to its end consumers purchasing power BREAKDOWN OF MERCIALYS AVERAGE SHOPPING BASKET IN RENTAL INCOME BY CUSTOMER NEED MERCIALYS SHOPPING CENTERS (H1 2023) (In € per visitor) Discretionary Essential retail +5.8% / year retail 29,3% 36,8% 19.4 17.3 16.3 16.4 15.5 Essential: Food & Catering Every
Slide 12: In a more vulnerable environment for retailers, mostly in textiles…
In a more vulnerable environment for retailers, mostly in textiles… Desirability style, values, sustainability… THE FASHION SECTOR IS CHARACTERIZED Higher level of BY OVERSUPPLY AND SOME PRESSURE ON MARGINS… Purchasing competition from FASHION power pressure › Clothing decreases structurally in the
Slide 13: … the management of the merchandizing mix is key
… the management of the merchandizing mix is key BREAKDOWN OF RENTAL INCOME THE MERCHANDIZING MIX IS STRICTLY MONITORED TO CONTINUE BY BUSINESS SECTOR ITS DIVERSIFICATION AWAY FROM TEXTILES, WHILE PRESERVING (% of annualized rental income at June 30, 2023) ORGANIC RENTAL GROWTH Services › Out of the
Slide 14: Mercialys firmly believes that food retailers are relevant tenants
Mercialys firmly believes that food retailers are relevant tenants 100% SELECTION CRITERIA BASED ON SALES CHANNEL (1) 90% 87% 85% 80% 74% 73% 70% 70% 60% 53% 50% 40% 30% 20% 10% 0% A wider choice Get the Discover Have access Manage a reasonable Consume of products? best prices? new products? to spec
Slide 15: Restructuring process triggered by Casino could lead to a diversification of tenant base
Restructuring process triggered by Casino could lead to a diversification of Mercialys’ tenant base on food retail BREAKDOWN OF MERCIALYS’ EXPOSURE TO FOOD RETAIL BY OPERATOR AND OWNERSHIP Mercialys is not a party to the conciliation proceedings initiated by the Casino group › There are no unpaid su
Slide 16: Further potential upside by reducing hypermarket space to benefit the shopping centers
Further potential upside could be triggered by reducing hypermarket space to benefit the shopping centers EXAMPLE OF NIMES SITE SINCE ACQUIRING HYPERMARKETS IN 2014 AND 2015, MERCIALYS HAS SUCCESSFULLY TRANSFORMED SIGNIFICANT HYPERMARKET SPACE INTO STORES OR MEDIUM-SIZED UNITS › Mercialys to capture
Slide 17: Letting actions in H1 2023, leading to +1.1% reversion and controlled vacancy
Letting actions in H1 2023, leading to +1.1% reversion and a vacancy rate that is under control › 65 renewals and relettings completed in H1 2023, in line with the lease expiry schedule › Average reversion of +1.1% at end-June 2023 › Affordability mix further strengthened CHANGE IN FINANCIAL VACANCY
Slide 18: FFO of €57.5m supported by organic growth
FFO of €57.5m supported by organic growth H1 2022 H1 2023 CHANGE (%) Organic growth in invoiced rents +5.3% +4.2% - EBITDA 75.3 72.3 -3.9% EBITDA margin 87.0% 82.0% - Recurring earnings (FFO) 57.5 57.5 +0.0% Recurring earnings (FFO) / share 0.61 0.62 +0.3% Loan-to-value 34.3% 36.1% - (incl. transfer
Slide 19: Organic growth driven by indexation and variable rents
Organic growth driven by indexation and variable rents Organic growth +4.2% €88.2m +2.0% €86.5m +€1.4m -€1.3m Lease rights +€3.2m -€0.2m +€0.4m Lease rights €0.3m -€1.7m €0.4m -€0.1m €86.1m €87.9m +2.1% Rental revenues Acquisitions Strategic Indexation Contribution Contribution Actions carried Accou
Slide 20: Stable FFO per share is consistent with the +2.0% full-year target
Stable FFO per share is consistent with the +2.0% full-year target €0.61 EBITDA margin €0.62 +0.3% /SHARE 82.0% /SHARE €57.5m + €1.7m - €4.2m €57.5m +0.0% + €0.1m - €0.1m +10.3% + €2.5m - €0.5m + €0.5m FFO Change in Change in Change in Change in Change in Change Change in FFO June 30, 2022 rental re
Slide 21: Change in EPRA NDV per share
Change in EPRA NDV per share (1) €20.94 EPRA NDV › €18.80/share › -10.2% over 6 months › -4.3% over 12 months - €0.96 (2) + €0.62 -€0.89 €18.80 - €0.63 - €0.27 Rent effect EPRA NRV + €1.24 › €19.03/share Yield effect › -7.4% over 6 months - €2.30 › -6.5% over 12 months Other effects +€0.16 (3) EPRA
Slide 22: -3.4% decrease in asset values driven by interest rate environment
-3.4% decrease in asset values driven by the interest rate environment and a higher risk premium from appraisers MAIN APPRAISAL ASSUMPTIONS AVERAGE APPRAISAL YIELD AND EPRA NIY Change in portfolio value excluding transfer taxes CHANGE ON A LIKE-FOR-LIKE BASIS (1) 12/2018 12/2019 12/2020 12/2021 12/2
Slide 23: Highly defensive portfolio value
Highly defensive portfolio value COMPARISON OF DIFFERENT “PRIME” DISCOUNT TO MERCIALYS REAL ESTATE YIELD RATES VERSUS RISK-FREE RATE (1) NET ASSET VALUE (2) (EPRA NTA – in %) 7.0% 6.2% 20.0% 6.0% 10.0% 5.0% 0.0% 4.0% -10.0% 3.0% 2.9% -20.0% 2.0% 1.0% -30.0% 0.0% -40.0% 2017 2018 2019 2020 2021 2022
Slide 24: Outlook & confirmation of 2023 targets
02 Outlook & confirmation of 2023 targets
Slide 25: Favorable liquidity profile
Favorable liquidity profile DEBT SCHEDULE AT END-JUNE 2023 (in €m) 2.7 years before next bond maturity Commercial paper DRAWN (drawn) 500 DEBT 300 Bonds 200 150 (drawn) 42 10 30 45 40 40 50 Revolving credit facility (undrawn) 180 UNDRAWN DEBT Confirmed Bank facility (undrawn) July 2024 Sept. 2023 Ju
Slide 26: 96% and 100% fixed-rate debt for 2023 and 2024
96% and 100% fixed-rate debt for 2023 and 2024, supporting a limited negative impact for higher interest rates CHANGE IN MERCIALYS’ COST OF DRAWN DEBT AND HEDGING VS. RATE ENVIRONMENT 4.0% 100% 3.5% 90% Cost of drawn debt, cost of bonds, Euribor 3.0% 2.7% 80% 2.7% 2.6% 2.6% 2.5% 2.6% 2.6% 2.6% 2.4%
Slide 27: Strong balance sheet, leaving headroom for investments
Strong balance sheet, leaving headroom for investments CHANGE IN LTV AND ICR 6.1x 5.9x 5.2x 38.6% 36.1% 36.6% 34.3% 35.3% 33.0% › +180bp increase in LTV over Given its strong balance H1 2022 2022 H1 2023 the last 12 month, driven by sheet, Mercialys will apply LTV (%) - excluding transfer taxes LTV
Slide 28: Mercialys positioned for growth with a strict return target
Mercialys positioned for growth with a strict return target › Diversifying the use of the shopping centers (health, coworking, Minimum 250bp spread FB&E) and integrating medium-sized stores or food & leisure with the cost of refinancing areas as additional anchors to fuel revenue growth STRENGTHENIN
Slide 29: Enriching F&B&E capabilities through a stake just below 23% in DEPUR EXPÉRIENCES
Enriching Mercialys’ F&B&E capabilities to boost retail sites through a stake just below 23% in DEPUR EXPÉRIENCES MERCIALYS INVESTED IN A ROUND OF FUNDRAISING BY DEPUR EXPÉRIENCES, A FOOD & BEVERAGE & ENTERTAINMENT CONSULTING FIRM › €1.7M financing round alongside Bouygues Immobilier and a Banque po
Slide 30: Working on a strong pipeline
Working on a strong pipeline TOTAL INVESTMENT STILL COMPLETION (€m) INVESTMENT TO BE COMMITTED DATE COMMITTED PROJECTS 20.2 18.8 2023 / 2026 Tertiary activities 20.2 18.8 2023 / 2026 CONTROLLED PROJECTS 148.4 143.3 2024 / 2025 Retail 129.9 125.0 2024 / 2025 Dining and leisure 3.5 3.4 2025 Tertiary a
Slide 31: Mercialys has factored in the impacts of the Net Zero Artificialization objective
Mercialys has factored in the impacts of the Net Zero Artificialization objective AUTHORIZATIONS AND FAVORABLE OPINIONS BY THE NATIONAL COMMERCIAL PLANNING COMMISSION (CNAC) (in sq.m) (1) 2021, adoption of the “Climate and Resilience” law, with one general principle: prohibiting any commercial devel
Slide 32: 2023 targets confirmed
2023 targets confirmed CHANGE IN RECURRENT EARNINGS (FFO) PER SHARE Increase of at least +2.0% vs. 2022 DIVIDEND POLICY Dividend ranging from 85% to 95% of 2023 recurrent earnings (FFO) 2023 HALF – YEAR RESULTS 32
Slide 33: Appendices
Appendices 4 f COMPTOIR vt = Dee MATHILDE rae? 2. SS, PIERCIALYS
Slide 34: Mercialys portfolio and shareholding structure
Mercialys portfolio and shareholding structure SHAREHOLDING STRUCTURE (at June 30, 2023) Leading listed French real estate company that is a commercial real estate pure player Treasury shares › Mercialys' portfolio is focused on large and neighborhood shopping Blackrock inc 0.8% centers that are lea
Slide 35: Operating and financial track record
Operating and financial track record ORGANIC GROWTH EBITDA MARGIN (incl. indexation) +3.7% +3.6% +4.1% +4.2% 84.3% 85.0% 84.0% 83.2% +3.0% 82.0% 74.8% -7.0% 2018 2019 2020 2021 2022 H1 2023 2018 2019 2020 2021 2022 H1 2023 LOAN-TO-VALUE EPRA NDV (excl. transfer taxes) (in € per share) 40.8% 21.14 20
Slide 36: Rental income structure
Rental income structure OVER 900 RETAILERS AND 2,054 LEASES BREAKDOWN OF MERCIALYS’ RENTAL INCOME BREAKDOWN OF MERCIALYS’ RENTAL INCOME BY TYPE OF RETAILER BY TYPE OF RETAILER CONSOLIDATED VISION ECONOMIC EXPOSURE (% of annualized rental income at Dec. 31, 2022 and June 30, 2023) (% of annualized re
Slide 37: Ownership breakdown of the hypermarkets anchoring Mercialys’ sites
Ownership breakdown of the hypermarkets anchoring Mercialys’ sites OWNERSHIP BREAKDOWN CASINO GROUP LEASE SCHEDULE (% interest and % economic exposure to rent) (1) (main leases: hypermarkets, supermarkets & Monoprix store) % HELD BY LEASE LEASE LEASE SITE TYPE MERCIALYS START DATE END DATE CHARACTER
Slide 38: Lease expiry schedule effectively staggered over time
Lease expiry schedule effectively staggered over time and benefiting from new and ongoing deals LEASE EXPIRY SCHEDULE (percentage of leases expiring / guaranteed minimum rent at June 30, 2023) 23.6% 14.9% 10.7% 9.2% 8.7% 6.7% 6.6% 5.4% 4.5% 5.4% 4.2% Expired at 2023 2024 2025 2026 2027 2028 2029 203
Slide 39: EPRA performance indicators
EPRA performance indicators JUNE 30, 2022 DECEMBER 31, 2022 JUNE 30, 2023 EPRA earnings - € per share 0.61 1.13 0.62 EPRA NRV - € per share 20.35 20.54 19.03 EPRA NTA - € per share 18.24 18.42 16.99 EPRA NDV - € per share 19.65 20.94 18.80 EPRA net initial yield - % 5.26% 5.29% 5.63% EPRA “topped-up
Slide 40: Recurrent earnings (FFO) & EPRA earnings
RECURRENT EARNINGS (FFO) & EPRA earnings IN THOUSANDS OF EUROS JUNE 30, 2022 JUNE 30, 2023 Invoiced rents 86,087 87,910 Lease rights 364 254 Rental revenues 86,450 88,164 Property taxes -13,310 -13,729 Rebilling to tenants 11,432 11,453 Non-recovered property taxes -1,878 -2,276 Service charges -16,
Slide 41: Net income attributable to owners of the parent
Net income attributable to owners of the parent IN THOUSANDS OF EUROS JUNE 30, 2022 JUNE 30, 2023 FFO 57,461 57,453 Depreciation and amortization -18,622 -18,926 Other operating income and expenses -432 -18,216 Impact of hedging ineffectiveness, banking default risk -25,959 -6,653 and net impact of
Slide 42: Balance sheet
Balance sheet IN THOUSANDS OF EUROS DECEMBER 31, 2022 JUNE 30, 2023 Intangible assets 3,381 3,102 Property, plant and equipment other than investment property 4,743 4,265 Investment property 1,907,148 1,880,215 Right-of-use assets 10,184 11,297 Investments in associates 35,203 35,268 Other non-curre
Slide 43: Breakdown of assets
Breakdown of assets Average appraisal yield rate: 6.21% at June 30, 2023 APPRAISAL VALUE APPRAISAL VALUE GROSS LEASABLE APPRAISED NET (Excl. Transfer taxes) (Incl. Transfer taxes) AREA AT NUMBER OF RENTAL INCOME AT JUNE 30, 2023 AT JUNE 30, 2023 JUNE 30, 2023 TYPE OF PROPERTY ASSETS AT JUNE 30, 2023
Slide 44: Disclaimer
Disclaimer › This communication contains forward-looking information and statements about Mercialys. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, obj